Having bad credit can affect your lives in many ways. You’ll find it hard to apply for credit cards, find an apartment to rent and even get higher interest rates when it comes to loans and credit cards and other side effects. You will also find it hard getting approved for a mortgage.
Thankfully, there is still hope. There is a chance to apply and get approved for a mortgage even if you have bad credit. Want to know how? Here are five smart tips for you.
Know the Reason Why You Have Bad Credit
The first thing that should be on your to-do list is to identify the reasons that led to your poor credit score. Here are some of those reasons.
Failure to abide by your credit agreement
Paying less than the required amount, paying late or missing a payment can hurt your credit history. Do this over time, and your score will go crashing down.
Choosing just about any credit card
When you tend to overspend and “over swipe” your credit cards, then it’s best to choose one with a credit limit and has low-interest rates. Do otherwise, and you’ll find it hard to stay above your credits and recover.
Paying only the monthly minimum
Many make the same mistake of only paying their minimum monthly dues. The thing is, you don’t get to save time and interest by doing this. You’re only pulling your score down, and you’ll find it hard to keep up with your monthly dues only to drown in credit.
Identity theft
Although you try to stay above your credits, if some tries to steal your identity and compromise all your financial accounts can send your rating down the drain.
Declaring bankruptcy
Declaring bankruptcy means you’re verifying the fact that you can no longer repay your outstanding debt. This will show up on your report and will have a direct impact on your score.
Nonexistent credit history
If you have no credit card and haven’t applied or got approved for a loan, then you will have no credit reference your lender can check.
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Boost Your Credit Score
The best way to start improving your credit is by paying off your credits. You can do this by:
- Never miss a monthly payment
- Try to pay a larger amount than the minimum required
- Keep your credit balances low
- Only open and apply for new credits when necessary
- Don’t close old credit accounts
- Dispute any errors in your credit report
Shop For Mortgage Lenders
Only applying on a single lender is limiting yourself of possibly finding a better loan option and mortgage terms. Make sure to shop for lenders and find one that understands your needs and situation.
Consider Different Mortgage Programs
When you have bad credit, you can go for an FHA Loan, a USDA Loan, or a VA home loan in Texas. For those who have 580 FICO score and below, go for an FHA Mortgage. For rural and suburban home buyers, a USDA Loan might be the best choice for you. If you’re a veteran, a service member or a spouse of eligible for a VA home loan in Texas, consider applying for this and you can enjoy many perks and benefits.
Save Up A Larger Down Payment
To compensate for your bad credit, you can check with different mortgage lenders if they will allow you to put down a higher down payment in exchange of mortgage.
